A piece of a private jet: the fractional ownership model

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For some entrepreneurs or members of a high-net-worth family, it may make sense to buy or lease their own private airplane.

There has been a flight, so to speak, toward private aviation, says James Elian, president and chief executive officer of Calgary-based AirSprint Inc., which operates a fleet of planes that customers either buy outright or share with multiple owners.

“Our fleet has grown by 50 per cent since the pandemic began in 2020, and it’s our seventh straight year of growth,” he says.

“The private aviation market has expanded by about 30 per cent overall. The onset of the COVID pandemic saw a lot of people who could always afford to fly privately, but couldn’t justify it to themselves before, to move towards private aviation,” he says.

Elian, whose company has been operating since 2000, has about 30 Cessna Citation CJ3 and Embraer Praetor 500 jets in his fleet, operated by a roster of 150 pilots.

“We’re almost like a private airline for about 400 well-off individuals and families,” he says.

Buying a piece of a plane

Many choose not to be the sole owner of their own plane but rather buy a piece of it instead.

“You can own, lease, charter or have fractional ownership. Fractional ownership is when you buy a portion of an airplane and its flying time,” says Shiraz Ahmed, who heads the Sartorial Wealth group at Raymond James Ltd. in Mississauga.

Fractional ownership not only puts private flying within reach for customers who don’t want to fuss with their own planes, AirSprint’s Elian says, it also ensures that flights will be easy to schedule.

“You buy a fraction and you get a certain number of flying hours on that aircraft. You can start with just a bit more than 3 per cent of a plane and get 25 hours a year. Or you can buy one-eighth and get 100 hours of flying time,” he says.

The fractional owner pays a fixed monthly fee for the aircraft, fuel, crew, catering, landing fees and other expenses for each occupied flight hour.

Airsprint offers different ways of paying for fractional ownership. The capital purchase ownership option means owners have title to their aircraft and have the ability to sell this share when they decide to exit the program. There is also a five-year lease ownership option that can be extended annually.

Some of the advantages of fractional ownership, according to private charter booking platform Jettly, are: guaranteed availability, shared maintenance and service fees, recouped share costs when you sell, no extra fees for one-way flights that some charter and jet-card programs charge, more flexibility with the service area including obscure locations, and, of course, the fact that it costs less than full ownership.

The “sweet spot” for fractional ownership is between 25 and 250 hours of annual flight time, according to Airsprint.

Why fly private

People opt for private flying for many reasons, Ahmed says. “During the pandemic, avoiding getting affected was a big concern for many. People want to control their environment,” he says.

Flying private also offers, well, privacy. “If you’re famous, or infamous I suppose, there’s a certain advantage in not travelling with people who want to come up to talk to you or get your autograph [or selfies],” Ahmed adds.

For doing business, the advantages of private flight are obvious, Elian says. “You can work on your laptop without worrying about competitors looking over your shoulder and you can hold private meetings with people who have to stay in the room as long as you’re in the air together.”

Even with these business advantages, most of AirSprint’s private flights are for high-net-worth customers travelling for non-business use or for family office meetings, Elian says.

The other advantages are convenience and, of course, luxury treatment, he adds.

“You don’t have to go through airport security. In fact, your airport doesn’t have to be a big commercial or international airport but can be a smaller one such as Buttonville Airport [north of Toronto],” he says.

“We can get a plane to pick you up and take you to your destination without connecting flights — if you need to go from Winnipeg to Houston, we’ll pick you up in Winnipeg and take you straight there. You can save up to eight hours on a typical trip,” he adds.

“You drive up to the plane and someone will get your luggage and someone else will park your car. If it’s an international flight, customs agents will come on board and check your passport. We also have the full range of snacks and beverages on board.”

There’s room to stretch out, and private jets can fly at altitudes of up to 45,000 feet, above commercial traffic so there’s less sky congestion, Elian notes.

Other options

Other options for private aviation include chartering, other types of co-ownership (such as partners getting together to buy a jet), jet cards (prepaid cards that can be loaded with a number of flight hours or a dollar amounts) and buying a plane (with some hiring it out as a charter when not using it).

Some of the concerns raised about fractional ownership by private charter booking platform Jettly are: the upfront costs and depreciation; long contracts with hefty penalties for breaking them; scheduling issues and out-of-commission planes for servicing.

For those concerned about the environmental impact of private flight, Elian says that AirSprint is moving toward becoming carbon neutral by, for example, using biofuels made from agricultural waste for fuel. “We’re aiming to entirely use sustainable aviation fuel by 2025, and we buy verifiable carbon offsets. We’re trying to be leaders,” he says.

The private jet business is competitive within and from Canada to most destinations in North America and to the Caribbean, and it occasionally also reaches cities in Europe. Ahmed adds another alternative to private flying for some might be to buy a top-of-the-line business or first-class commercial tickets.

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